NV246 Transfer Case - front not engaging

[Steve N.]

I have a 2006 Yukon XL 2500 with the 6.0L, 4L80E transmission, and NV246 transfer case. It has the 4 buttons for 4wd (Auto, 2wd, 4H and 4L). I tested it with all four wheels off the ground and it appears to shift into each position, but the front drive shaft does not spin in any mode. If I put it in Auto it flashes "Service 4wd" and sets a C0374 code, and it won't shift out of Auto until I cycle the key. With the key on but engine not running I can hear the front axle actuator and the encoder motor operating. On a gravel road it shifts in and out of low range, but doesn't seem to get any power from the front drivetrain. The front actual actuator seems to be working.

 

From what I've read, it sounds like it is likely a failed clutch pack or chain, but before I drop the T-case I'm wondering if this can be caused by a faulty encoder motor? Is it possible that the encoder would have enough movement/power to shift it between the positions, but not actually engage the clutch pack?

 

Update: I pulled the drain plug and only got maybe an ounce or two of fluid and there are small chunks of something in it that I'm guessing are clutch packs. I found what appears to be a pinhole leak in the case from the pump ears. I'm guessing this means the clutches are probably toast. Obviously it will need a new case-back, but is it worth filling it back up with Auto Trak II fluid to see if it works, or am I just looking at needing a rebuild?

Edited March 22, 2025 by Steve N.
Adding an update